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Chapter 6. Exploiting Established Compan... > Established Company Weaknesses That ...

Established Company Weaknesses That New Firms Can Exploit

What should you do to compete with established firms? The answer is that successful entrepreneurs offset the advantages that established companies have by exploiting the weaknesses of established firms. Even the best established companies have Achilles’ heels by virtue of being established entities. Such things as seeking efficiency, exploiting existing capabilities, listening to customers, exploiting an existing organizational structure, and rewarding people for doing their jobs provide advantages to established companies in many settings, but make it difficult for established companies to compete with entrepreneurs to exploit many opportunities. Successful entrepreneurs exploit these points of weakness by focusing on opportunities in which these things offset the advantages that established firms have over new firms.

The Focus on Efficiency

Established companies often seek greater and greater efficiency in their operations. By becoming more efficient, they can often achieve cost advantages over their competitors. For instance, a company that can manufacture a product at 80 percent the cost of its major competitors might be able to sell its products at lower prices than competitors and steal the competitors’ customers. Therefore, efficiency is very important when firms are competing in an industry.


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